We’d Love to Move, But We Can’t Afford the Property Taxes on a New Home

I’ve heard this concern from many longtime Santa Cruz homeowners.

They’d like a smaller home, a single-story floor plan, or a place closer to family. But they’re worried that if they sell and buy another home, their property taxes will increase dramatically.

For homeowners who purchased their homes years or even decades ago, that concern is understandable.

What many people don’t realize is that California’s Proposition 19 may allow eligible homeowners age 55 and older to transfer their existing property tax base to a replacement home.

In other words, moving may not mean starting over with a brand-new property tax bill.

Let’s take a look at how it works.

First, Why Are Your Property Taxes So Low?

Thanks to Proposition 13, property taxes in California are generally based on the value of your home when you purchased it, with limited annual increases.

That means a homeowner who purchased a home in Santa Cruz thirty years ago may be paying taxes based on a value that is far lower than today’s market price.

Meanwhile, a new buyer purchasing the same home today would likely pay taxes based on the current purchase price.

This difference is often what makes homeowners nervous about moving.

What Proposition 19 Changed

Before Proposition 19, transferring your property tax base was much more restrictive.

Today, eligible homeowners who are age 55 or older can transfer their tax base to another home anywhere in California.

Even better, the benefit can generally be used up to three times during your lifetime.

For many homeowners, this means they can move closer to family, downsize, or find a home that better fits their needs without automatically giving up the tax advantages they’ve built over the years.

What If the New Home Costs More?

This is where many homeowners are surprised.

You are not limited to purchasing a less expensive home.

If your replacement home costs more than the home you sold, you may still qualify to transfer your tax base. An adjustment is made to account for the difference in value, but you may still save thousands of dollars each year compared to a full reassessment.

A Simplified Example

Let’s say you’ve owned your home for many years and your taxable value is $400,000.

You sell that home and purchase another property.

Without Proposition 19, your new home’s taxable value would generally be based on the new purchase price.

With Proposition 19, you may be able to carry your existing tax base with you, resulting in a significantly lower taxable value than if you were reassessed from scratch.

The Bottom Line

Many homeowners stay in homes that no longer fit their lifestyle because they assume moving will cause their property taxes to skyrocket.

In some cases, that assumption is costing them opportunities they didn’t realize they had.

If you’re over 55 and have been putting off a move because of concerns about property taxes, it may be worth exploring how Proposition 19 applies to your situation.

Every homeowner’s circumstances are different, so be sure to consult with a qualified tax professional regarding your specific tax implications.

If you’d like help understanding how a move could affect your property taxes, I’d be happy to connect you with resources and help you evaluate your options.

Suzie Thomas
Coldwell Banker Realty
Serving Santa Cruz County